Rising Fuel Demand Is Driving Bullish Sentiment in Oil Markets

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Following weeks of lukewarm demand statistics, we might finally be on the brink of seeing summer demand kicking in. A reported jet fuel shortage in Japan, Goldman Sachs’ relatively bullish view on transportation fuel demand over the summer, and the prospect of a US SPR replenishment boost have lifted Brent futures above the $81 per barrel mark.

Portfolio investors exited a record amount of long positions in the week ending June 4 as the prospect of OPEC+ bringing back production into 2025 soured the bullish sentiment, selling a total of 194 million barrels in the six leading futures contracts, OilPrice.com reports.

Iraq’s oil minister Hayan Abdel-Ghani noted progress in negotiations with Kurdistan regional officials on a potential deal to resume oil exports via the idled 450,000 b/d capacity Kirkuk-Ceyhan oil pipeline, halted since March 2023.

The shares of Saudi national oil company Saudi Aramco (TADAWUL:2222) gained this week after the company raised $11.2 billion in its secondary share offering, with at least half of sales reportedly going towards international investors.

The government of New Zealand vowed to introduce legislation that would remove a disputed ban on offshore oil exploration, in place since 2018, by the end of this year, reversing the oil policy of the previous center-left Labour government.

Having just loaded the first-ever Meleck cargo last month, exports could halt again as the Benin-Niger geopolitical spat took another turn this week, with the former arresting 5 people it believes to be Nigerien soldiers working undercover at the port of Seme.

Japan’s Kansai Electric Power is planning to issue transition bonds to finance future nuclear power projects, aiming for some ¥30 billion ($190 million), the second Japanese firm in two months to turn to bonds as a nuclear financing tool.

Russia has announced it plans to export coal to India via Iran’s railway network system as Moscow seeks to ramp up supplies to the world’s second-largest coal consumer, to be ultimately shipped from the Iranian port of Bandar Abbas.

Houthi militias have targeted two container ships this week, the Swiss-owned Tavvish and the German-owned Norderney, damaging both with anti-ship ballistic missiles some 70 nautical miles southwest of Aden.

Environmentalist groups sued Canada’s leading oil firm Suncor Energy (TSO:SU) for alleged air pollution violations at its 98,000 b/d Commerce City refinery in Colorado, claiming they’ve recorded more than 1,000 emission violations in 2019-2023.

The International Energy Agency forecasts that global upstream spending would increase by 7% this year to $570 billion, slightly lower than the 9% year-on-year pace of 2023, insisting that it’s much more than is needed.

Saudi crude exports to China are expected to bottom out in July as Chinese refiners nominated only 36 million barrels for next month, opting for other sources of crude as Middle Eastern barrels get more expensive as margins flatten out.

Less than three months after the Dali tanker crashed into the Francis Scott Key Bridge the port of Baltimore has fully reopened as the operating dimensions of the navigation channel were lifted to 700 feet wide and 50 feet deep.

Canada’s leading oil producers have objected to the government’s plan to cap emissions, saying that a carbon tax would be the preferred way of climate impact mitigation, as limiting emissions would also impact future production growth.